Reliance-BP Makes First Bid In Eight Years For Oil Block
Reliance Industries Ltd. and its British partner BP Plc have made their first bid for an oil and gas exploration acreage in over eight years by bidding for one of the 32 blocks up for auction in latest licensing round. The auction also saw mining major Vedanta Ltd. putting in as many as 30 bids while state-owned Oil & Natural Gas Corporation Ltd. bid for 20.
Bidding for 14 blocks on offer in the Open Acreage Licensing Policy round-II and another 18 oil and gas blocks and five Coal-Bed Methane blocks on offer in OALP-III closed on Wednesday.
Official sources said Vedanta, which had walked away with 41 out of the 55 blocks offered in OALP-I last year, bid for 30 areas. ONGC bid for 20 blocks while Oil India Ltd. bid for 16. Indian Oil Corporation, GAIL (India) and SunPetro bid for two blocks each, they said.
RIL-BP made an offer for one block in the Krishna Godavari basin.
This is the first time that BP is bidding for an exploration acreage in the country. It had entered the country buying 30 percent stake in RIL's 21 oil and gas exploration blocks in 2011 for $7.2 billion. All but a couple of blocks have since been relinquished.
Mukesh Ambani-owned Reliance Industries had on its own bid for six blocks in the ninth round of New Exploration Licensing Policy but did not win any block.
NELP has since been replaced by Hydrocarbon Exploration Licensing Policy under which OALP bids round have been held.
Sources said the block RIL-BP bid for is the same which BP had demarcated during the expression of interest stage.
India had in July 2017 allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration.
Under the OALP, companies are allowed to put in an expression of interest for prospecting of oil and gas in any area that is presently not under any production or exploration licence.
The expressions of interest can be put in at any time of the year but they are accumulated twice annually.
The blocks or areas that receive expressions of interest at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a five-mark advantage.
The two windows of accumulating expressions of interest end on May 15 and Nov. 15 every year. Expressions of interest accumulated till May 15 are supposed to be put on auction by June 30 and those in the second window by Dec. 31.
BP made the expression of interest for a block in the window provided for OALP-II which closed on May 15, 2018. However the EoIs collected in this window were put on bidding only in January this year, a delay of six months.
A month later, the government offered another 23 oil and gas blocks and CBM blocks in third round, for which EoIs accumulated by Nov. 15, 2018.
Sources said OALP-II and OALP-III ran concurrently.
Oil Minister Dharmendra Pradhan had at the time of launch of OALP-II bid round on Jan. 7 stated that an investment of about Rs 40,000 crore is expected in the prospecting of oil and gas in blocks offered.
In the first round of OALP last year, as much as Rs 60,000 crore was committed in the exploration of oil and gas in 55 blocks or areas.
In the third round, the government is expecting up to $700 million (about Rs 49,000 crore) of investment that it hopes will help raise domestic output and cut imports.
Officials said the 14 blocks in OALP-II are estimated to hold in-place resource of 12,609 million tonne oil and oil equivalent gas.
In OALP-1, mining mogul Anil Agarwal-led Vedanta walked away with 41 out of 55 blocks bid out. Oil India won nine blocks while ONGC managed to win just two.
The 55 blocks have a total area of 59,282 sq km. This compares to about 1,02,000 sq km under exploration prior to OALP.
Blocks are awarded to the company which offers the highest share of oil and gas to the government as well as commits to do maximum exploration work by way of shooting 2D and 3D seismic survey and drilling exploration wells.
Increased exploration will lead to more oil and gas production, helping the world's third largest oil importer to cut import dependence.
Prime Minister Narendra Modi has set a target of cutting oil import bill by 10 percent to 67 percent by 2022 and to half by 2030.
Import dependence has increased since 2015 when Modi had set the target. India imports nearly 84 percent of its oil needs.
The new policy replaced the old system of government carving out areas and bidding them out. It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.